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MortgageGuy 2014-03-05 04:13 PM

Ask the Mortgage Guy?
My name is Dan Faubert of Ottawa-Carleton Mortgage. I have been a mortgage broker in Ottawa since 1985, dealing mainly with the financing of residential real estate across Ontario. As a mortgage broker, I deal with dozens of financial institutions, including the "big banks", credit unions, and many life and trust companies. It is with these varied sources of funds that allows me to have "better than bank" rates and products to fill many needs.
I was referred to this site in 2008 from a client who had purchased a builder built home, and thought that my finance knowledge may be of use to others as well. I have been involved with the “Ottawa forum” since then, and have enjoyed meeting and helping dozens of people over the years. Most recently, helping a client who has purchased in Kleinburg, and in so doing, decided to start a thread in the forum here.
So the doors are open. If you have mortgage questions or looking for advise, I would be happy to do my best in answering them and offering suggestions. If I hear of up to date mortgage news that I feel is relevant to the public, I will also post it here along with current mortgage rates. I can lend anywhere in the Toronto/GTA area.
Have a great day,
Dan :)

MortgageGuy 2014-03-06 02:04 PM

Current Mortgage Rates March 6, and Bank of Canada
So I figured I would start out with letting you know what I do. As a mortgage broker, I deal with most of the lenders you know of, and many that you wouldnít. Trust and life companies, credit unions, that donít have a branch on every street corner, and because of that, often offer very attractive mortgage rates to you the consumer. If you qualify normally(approved at your bank), I charge NO BROKER FEES, the lenders pay me, and at the same time you get great rates. The other advantage of dealing with a lender through a broker channel, is that they do NOT want your banking. Nothing in your personal banking life has to change. You just provide a VOID cheque to the lender, and they withdraw your mortgage payment from whatever bank account you want. No changing of bank accounts to get a better mortgage rate.
Did you know that it is illegal to tie rate to services? So always get the best mortgage rate you can, without strings attached.
Also remember that rate is not everything, and what you see is not always what you get. When requesting a mortgage rate, always make sure whoever you ask knows youíre circumstance, because who you are and what youíre needs are directly affect what you will get. Iíll write another post later on ďall mortgages are not alikeĒ.
So here are best rates that I know ofÖ
5 yr fixed closing within 45 days 3.04%
5 yr fixed closing within 120 days 3.09%- insured- less than 20% down payment
5 yr fixed closing within 120 days 3.14%- conventional- more than 20% down payment
5 yr fixed closing within 6 months 3.44%
5 yr fixed closing within 12 months 3.94%*
*(this lender requires a $500 deposit before committing- non refundable if you donít take the mortgage in the end)
Best variable Prime -.55% 5 yr variable(3-.55=2.45% today)
7 yr fixed closing within 120 days 3.70%
Dan :)

MortgageGuy 2014-03-07 12:34 PM

Something to help forget about winter!
Want an inground pool, and you have an unlimited budget, see the link below
Not your typical urban home setting:)
Questions on mortgages, I'm here for you. Drop me a line, just remember if personal details, email me directly, don't post personal stuff on the forum.
Have a great weekend,
Dan :)

MortgageGuy 2014-03-10 04:27 PM

Rate update
5 yr fixed 120 day closing 3.09%
3.04% 5 yr fixed closing in 45 days
See website for complete term rates.
Prime less .55 or 2.45% today for 5 yr variable
Always make sure any mortgage you take has good prepayment(min 15% +15%), is portable and increaseable(can be refinanced during term), and has bridge financing. Make sure it also isn't registered as collateral, unless it is necessary for your purposes(ie getting a secured L/C).
Dan :)

MortgageGuy 2014-03-12 02:17 PM

Follow up on terms of a mortgage
From a previous comment, I thought I would elaborate on what I feel are the required components in a mortgage.
Pre-payment Privilege- So when you sign up for a mortgage, the term you take(ie 5 yr) is in fact your contract with the bank. Most fixed rate mortgage terms are closed, meaning that you can pay nothing more than your allowed monthly/biweekly payment. Any more than that and you would incur a penalty. Therefore the lenders came out with what we call a pre-payment privilege, that allows you to pay a %(usually 15 to 20%, dependant on the lender) extra against the principle outstanding during term without penalty. A common 15% + 15% pre-payment means that you are allowed to pay up to 15% of the original mortgage amount, each year on any payment day, as many times in the year as you want. You are also allowed to increase your mortgage payment by up to 15%. These payments all go directly towards principle, no penalty.

Portable and Increasable- Any mortgage should allow you to sell your house and buy a new one, and take your old mortgage with you to the new property. The other issue is that most people who do this are also likely buying a more expensive home, and therefore the existing mortgage isnít large enough. So as above, if during the term of a mortgage you sell your home, and canít take your existing mortgage with you, you would have to break your contract with the bank, discharge the mortgage, and incur a large penalty.
The port and increase clause allows you to bring the old mortgage with you at the old rate, increase it by the amount of money needed at the current rates of that time, and have a new, larger mortgage on the new home. The bank still has a mortgage with you, just on a different property, therefore the old mortgage was not cancelled, and you now donít have to pay the penalty.

Bridge Financing- Building on the above, when you sell your home and purchase another, the dates often donít line up(in the last 5 homes I have bought and sold, it has never happened). The chances are slim that all three parties, the purchaser of your home, the vendors of your new home and you, all wanting the same dates to close on. For example, if your house purchase is closing on July 1st, and your sale of your existing home is closing after, on July 15th, where will your down payment come from? This problem is solved by the lender giving you your mortgage, and also lending you the down payment for the 15 days. The lender knows that they will get their money back from your UNCONDITIONAL sale on July 15th. The key here is that you have to have an unconditional sale(all financing conditions etc have been waived by the purchaser).

Bridge financing in my opinion, is one of the most important components of your mortgage that is not available with some lenders, and unless you ask, you wonít know. Saving a small amount in rate, is not worth not having bridge financing. There are usually some set fees involved with a bridge, and interest charged on the borrowed money for the period of the bridge. But these costs are small compared to the convenience of buying your new home in advance of you sale.

Refinancing- Some lenders offer a no frills mortgage that wonít allow you during term to refinance, meaning to pull equity out of your home to consolidate debts etc. Remember that your term is a contract, so in this scenario, if you need to refinance your home, you would have to pay a penalty to break your mortgage. An unnecessary expense when most lenders will allow it. Donít get stuck with a lender who doesnít offer refinancing during term, just to save a little in rate.
Remember I'm always open for questions!
Dan :)

MortgageGuy 2014-03-15 10:21 AM

collateral mortgages
I mentioned in a previous post about making sure any mortgage you take is not a collateral mortgage, unless you need a secured L/C, otherwise you don't want one. Just over two years ago, T.D. Bank began registering all their mortgages as collateral. Since then National Bank and ING Direct also are now doing the same. These are the only three banks registering all of their mortgages this way.

In a nut shell, by registering a collateral mortgage, it ties you to that lender, making it costly to try and leave, even if the mortgage is up for maturity. They market it as a way to allow you to refinance at a later date with no cost, not highlighting the negatives.

Rather that reinvent the wheel, see link below to an article that explains this type of mortgage very well.

Only thing to clarify is that not all lenders register at 125% of purchase price. One lender does give you a choice of only registering the mortgage for the amount you are borrowing(but still a collateral so still problems) or for a 100% of purchase price. Another only registers for 100% of purchase price. Read the article. It is well written,concise, and does a far better job than I can write here.

It is important to know that ALL banks have been using collateral mortgages for a number of years, but they have only been used when taking a mortgage product that has multiple pieces(i.e. a fixed portion and a secured L/C)
So remember if you are taking or have a secured L/C there is a high probability that you have or are getting a collateral mortgage. If you need a secured L/C, so be it, but if you don't NEED one, don't take one and avoid the problems they incur. I have seen many times clients offered L/C's when in fact they have no need for one.
Have a great weekend, and think twice about taking a mortgage product that you don't need.
Dan :)

Selvi 2014-03-16 09:05 AM


For 1 million dollar plus homes is true now that we have to put 20% down, plus extra, like example if it's 1.3 million, we put 20% ($260,000) + we have put half of the extra $300,000, so it's $150,000, so in total for a downpayment of $410,000 ?

MortgageGuy 2014-03-17 12:49 PM

GTA/ Loan to Value on over a $1,000,000 Purchase
Hello Selvi,
Thanks for the question. So all purchases with less than 20% down payment have to be "insured mortgages" through either, CMHC, Genworth, or Canada Guaranty. Meaning that no matter which lender you use, the mortgage cannot be approved without it being insured through one of the above. The Insurance premium is paid by the borrower.

The government stepped in over a year ago and regulated that NO HOME PURCHASE OVER a Million $’s can be insured. Thus NO LENDER today is allowed to finance over 80% of purchase price if over a million $’s.
With that being said, EVERY LENDER ALSO HAS THEIR OWN POLICIES, regarding % of purchase price that is allowed through them. For example some lenders have policy that they will only lend 80% of the first 1 Million, and 50% of balance.
Therefore on a $1,500,000 purchase, they would only lend $1,050,000, on $1,500,000 purchase price.
So in this scenario only 70% of actual purchase price.

In your example on a $1,300,000 purchase you would need down payment of
$350,000, or 73% LTV on the 1st mortgage. (20% of 1,000,000= $200,000) + (50% of 300K= $150,000) therefore you would need downpayment of 200+150= $350K.
Rules are made to be broken, and exceptions may be available depending on strength of the overall file.
Feel free to drop me a line directly at if anyone has personal circumstance that you would want me to look at.
Always happy to help, and always open for questions.

And Selvi, for being the 1st one to ask me a question, if you email me your mailing address, I would be happy to mail you out a $25.00 gas gift card! Thanks for the great question!
Dan :)

MortgageGuy 2014-03-18 06:24 PM

Jim Flaherty, federal finance minister resigns..
CBC article link below...
Dan :)

MortgageGuy 2014-03-20 11:25 AM

Update on Mortgage Rates
So as mentioned in an earlier post, rates advertised now can be very deal specific, and often you get what you pay for. Don't accept a slightly lower rate and lose bridge financing, or the ability to refinance during term etc. All sorts of conditions now on some rates being offered.
I am going to only mention rates i know that are NOT restrictive in nature and in my opinion a good mortgage. Or I will mention the restriction.

Best Rates that I'm aware of...
5 yr fixed closing within 45 days 3.04%(insured,no float down in rate allowed)
5 yr fixed closing within 120 days 3.09%- insured- less than 20% down payment
5 yr fixed closing within 120 days 3.09%- conventional- more than 20% down payment
5 yr fixed closing within 6 months 3.44%
5 yr fixed closing within 12 months 3.94%*
*(this lender requires a $500 deposit before committing- non refundable if you donít take the mortgage in the end- I will refund it to you if take this rate through me, and I end up moving you elsewhere in the end.)
Best variable Prime -.55% 5 yr variable(3-.55=2.45% today)
7 yr fixed closing within 120 days 3.70%
Have a great day,
Dan :)

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